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June 9, 2005

Google Now Most Valuable Media Company

by Sam Savage

NEW YORK (Reuters) -- Google Inc. took over the top spot as the most highly valued media company this week, surpassing Time Warner Inc. in just 10 months of trading as a public company.

Google's share price on the Nasdaq rose another $2.18, or 0.75 percent, to close at $293.12 on Tuesday, an all-time high. Stock market analysts have suggested the stock could go as high as $325 or $350 a share.

With a current stock market capitalization of more than $80 billion, Google is now worth more than any other media company in the world. That includes Time Warner, created five years ago when AOL purchased Time Warner for $106 billion in a much-hyped combination of old and new media.

But Time Warner's share price has deteriorated since the dot.com bubble burst -- its market capitalization on Tuesday stood at $78.1 billion -- and investors view Google as the hot internet and media company these days.

Even Yahoo Inc., seen as one big internet media competitor, carries a market value some $27 billion less than that of Google.

This all comes just 10 months after Google debuted in an initial public offering last August, priced at $85 a share. And it has led to some concerns that the company may be overvalued, a throwback to the hype of the dot.com era.

Google's sales last year, for instance, totaled just $3.2 billion while Time Warner's stood at $42 billion. And Mountain View, California-based Google is trading at a sharply higher multiple than any other media company except Yahoo.

Google shares now trade at 50 times the average estimate of analysts surveyed by Reuters Estimate of earnings in 2005. Compare that with Time Warner, which trades at 22 times earnings, Disney, which trades at 21 times earnings, or Viacom, which trades at 19 times earnings.

Even so, not one of the 30 analysts polled by Reuters Estimates lists Google as a sell.